3003 Tasman Drive, Santa Clara, CA 95054
www.svb.com

For release at 1:00 P.M. (Pacific Time)                             ...
First Quarter 2009 Summary
                                                                                               ...
(7)  Tangible common equity consists of SVBFG stockholders’ equity (excluding preferred equity and unrealized gains and lo...
were partially offset by a decrease in interest expense from borrowings due to lower LIBOR rates as well as lower
average ...
The following table provides a summary of our concentration of loans individually greater than $20 million by
industry sec...
As a result of adopting the requirements of FSP APB 14-1, our net loss applicable to common stockholders for the
first qua...
the fourth quarter of 2008 to discontinue offering a third party off-balance sheet sweep product which
       reduced aver...
The following table provides a summary of certain noninterest expense (GAAP basis) items:

                               ...
impact of tax advantaged investments on our overall pre-tax loss. This decrease was partially offset by a 16.4
percent inc...
Outlook for the Year Ending December 31, 2009

Our outlook for the year ending December 31, 2009 is provided below on a GA...
financial results (and the components of such results) and expectations about the impact of transactions for the
year 2009...
SVB FINANCIAL GROUP AND SUBSIDIARIES
                                            INTERIM CONSOLIDATED STATEMENTS OF INCOME...
SVB FINANCIAL GROUP AND SUBSIDIARIES
                                                    INTERIM CONSOLIDATED BALANCE SHEE...
SVB FINANCIAL GROUP AND SUBSIDIARIES
                                                                      INTERIM AVERAGE...
Gains on Derivative Instruments, Net
                                                                                     ...
Q1 2009 Earning Report of SVB Financial Group
Q1 2009 Earning Report of SVB Financial Group
Q1 2009 Earning Report of SVB Financial Group
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Q1 2009 Earning Report of SVB Financial Group

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Q1 2009 Earning Report of SVB Financial Group

  1. 1. 3003 Tasman Drive, Santa Clara, CA 95054 www.svb.com For release at 1:00 P.M. (Pacific Time) Contact: April 23, 2009 Meghan O’Leary Investor Relations (408) 654-6364 NASDAQ: SIVB SVB FINANCIAL GROUP ANNOUNCES 2009 FIRST QUARTER FINANCIAL RESULTS SANTA CLARA, Calif. — April 23, 2009 — SVB Financial Group (NASDAQ: SIVB) today announced financial results for the first quarter ended March 31, 2009. Consolidated net loss applicable to common stockholders for the first quarter of 2009 was $10.5 million, or $0.32 per diluted common share, compared to net income available to common stockholders of $1.4 million, or $0.04 per diluted common share, for the fourth quarter of 2008, and net income available to common stockholders of $27.1 million, or $0.78 per diluted common share, for the first quarter of 2008. Highlights of our first quarter 2009 results included: • Provision for loan losses of $43.5 million, of which $32.3 million related to two loans in our hardware industry portfolio, with the remainder primarily from certain loans to early stage companies. • Net losses on investment securities, net of noncontrolling interests (formerly referred to as minority interests), of $4.6 million due to lower valuations of our venture capital/private equity investments as a result of the continuing effects of the downturn in the overall economy. Consolidated net losses on investment securities, including noncontrolling interests, were $35.0 million. • Growth of $2.3 billion in average deposit balances to $7.9 billion, which decreased our average loan-to- deposit ratio to 64.5 percent for the first quarter of 2009. • A decrease in our net interest margin from 5.39 percent to 3.97 percent, primarily due to significant increases in cash due to the growth in our deposit balances, as well as from the current low interest rate environment. • A non-tax deductible goodwill impairment charge of $4.1 million resulting from changes in our outlook for the future financial performance of eProsper, our data management services company. “These results tell us that our clients were significantly affected by the continuing economic downturn, more so than we had anticipated,” said Ken Wilcox, president and CEO of SVB Financial Group. “Given that we are operating in the worst economic environment in nearly 60 years, we were expecting higher-than-normal loan losses. But the continued volatility and deterioration of the economy made it extremely challenging to predict exactly when and where such losses might occur. We are monitoring and managing our loan portfolio with increased vigilance and we will continue to keep our focus on identifying and preventing potential problems. “We believe the work we have done in the last year to strengthen our capital position and ensure our continued liquidity will provide sufficient cushion to absorb these losses while allowing us to take advantage of the current market environment to invest in building our business and helping our clients succeed. It’s true, we expect the year to continue to be challenging; but we also expect to emerge from this difficult market cycle with greater market share, and ready to take advantage of the upside potential as the economy recovers.”
  2. 2. First Quarter 2009 Summary Three months ended % Change from March 31, December 31, March 31, December 31, March 31, 2009 2008 2008 2008 2008 (Dollars in millions, except share data and ratios) Income Statement: Diluted (loss) earnings per common share (1) $ (0.32) $ 0.04 $ 0.78 NM % (141.0) % Net (loss) income attributable to SVBFG (1) (7.0) 2.1 27.1 NM (125.8) Net (loss) income available to common stockholders (1) (10.5) 1.4 27.1 NM (138.7) Net interest income (1) 91.5 96.4 90.8 (5.1) 0.8 Provision for loan losses 43.5 71.0 7.7 (38.7) NM Noninterest (loss) income (3.6) 28.9 41.6 (112.5) (108.7) Noninterest expense 87.1 61.8 83.4 40.9 4.4 Non-GAAP net (loss) income available to common stockholders (1)(2) (6.5) 1.4 27.1 NM (124.0) Non-GAAP noninterest expense, net of noncontrolling interests (2) 79.7 58.8 80.7 35.5 (1.2) Fully Taxable Equivalent: Net interest income (1)(3) $ 92.1 $ 97.0 $ 91.3 (5.1) % 0.9 % Net interest margin (1) 3.97 % 5.39 6.27 (26.3) (36.7) % % Shares Outstanding: Common 32,935,515 32,917,007 31,879,622 0.1 % 3.3 % Basic weighted average 32,931,714 32,809,705 32,279,892 0.4 2.0 Diluted weighted average 32,931,714 33,450,626 34,582,568 (1.6) (4.8) Balance Sheet: Average total assets (1) $ 10,456.4 $ 8,210.6 $ 6,752.0 27.4 % 54.9 % Average loans, net of unearned income 5,116.3 5,226.7 4,112.9 (2.1) 24.4 Average interest-earning investment securities 1,464.2 1,357.5 1,263.1 7.9 15.9 Average noninterest-bearing demand deposits 4,636.6 3,227.0 2,899.6 43.7 59.9 Average interest-bearing deposits 3,291.2 2,446.5 1,535.4 34.5 114.4 Average total deposits 7,927.7 5,673.5 4,435.0 39.7 78.8 Average short-term borrowings 47.0 232.5 234.9 (79.8) (80.0) Average long-term debt (1) 970.2 968.0 886.0 0.2 9.5 Period-end total assets (1) 10,958.8 10,020.8 6,897.3 9.4 58.9 Period-end loans, net of unearned income 5,003.1 5,506.3 4,349.2 (9.1) 15.0 Period-end investment securities 2,032.2 1,786.1 1,618.5 13.8 25.6 Period-end noninterest-bearing demand deposits 5,228.8 4,420.0 3,034.9 18.3 72.3 Period-end interest-bearing deposits 3,253.5 3,053.5 1,734.3 6.5 87.6 Period-end total deposits 8,482.3 7,473.5 4,769.2 13.5 77.9 Off-Balance Sheet: Average total client investment funds $ 17,701.3 $ 21,038.0 $ 21,894.5 (15.9) % (19.2) % Period-end total client investment funds 16,894.7 18,579.7 20,966.9 (9.1) (19.4) Total unfunded credit commitments 5,047.6 5,630.5 4,860.7 (10.4) 3.8 Earnings Ratios: Return on average assets (1)(4) (0.27) % 0.10 1.62 NM (116.7) % % % % Return on average common SVBFG stockholders' equity (1)(5)(6) (5.52) 0.74 15.86 NM (134.8) Asset Quality Ratios: Allowance for loan losses as a percentage of total gross loans 2.18 % 1.93 1.13 13.0 92.9 % % % % Gross charge-offs as a percentage of average total gross loans (annualized) 3.30 1.93 0.60 71.0 NM Net charge-offs as a percentage of average total gross loans (annualized) 3.21 1.80 0.52 78.3 NM Other Ratios: Total risk-based capital ratio 18.87 % 17.58 15.54 7.3 % 21.4 % % % Tangible common equity to tangible assets (1)(7) 6.94 7.57 9.76 (8.3) (28.9) Tangible common equity to risk-weighted assets 10.11 9.23 9.94 9.5 1.7 Operating efficiency ratio (1)(8) 98.49 49.10 62.81 100.6 56.8 Period-end loans, net of unearned income, to deposits 58.98 73.68 91.19 (20.0) (35.3) Average loans, net of unearned income, to deposits 64.54 92.12 92.74 (29.9) (30.4) Non-GAAP Ratios: (1)(2) Non-GAAP return on average assets (9) (0.11) % 0.10 1.62 NM (106.8) % % % % Non-GAAP return on average common SVBFG stockholders' equity (6)(10) (3.38) 0.74 15.86 NM (121.3) Non-GAAP operating efficiency ratio (11) 66.90 43.69 60.07 53.1 11.4 Other Statistics: Common stock repurchases $ - $ - $ 44.6 -% (100.0) % Period-end SVB prime lending rate 4.00 % 4.00 5.25 - (23.8) % % Average SVB prime lending rate 4.00 4.20 6.26 (4.8) (36.1) 1,262 1,244 1,190 1.4 6.1 Period-end full-time equivalent employees NM- Not meaningful (1) Balances, results and ratios for all periods presented reflect our adoption of FSP APB 14-1. Refer to “Long-Term Debt” discussion for more details. Amounts for the quarters ended December 31, 2008 and March 31, 2008 have been retrospectively adjusted. (2) A reconciliation of non-GAAP calculations to GAAP is provided in the schedules attached. (3) Interest income on non-taxable investments is presented on a fully taxable equivalent basis using the federal statutory income tax rate of 35.0 percent. The taxable equivalent adjustments were $0.6 million, $0.6 million and $0.5 million for the quarters ended March 31, 2009, December 31, 2008, and March 31, 2008, respectively. (4) Ratio represents annualized consolidated net (loss) income attributable to SVB Financial Group (“SVBFG”) divided by quarterly average assets. (5) Ratio represents annualized consolidated net (loss) income available to common stockholders divided by quarterly average SVBFG stockholders’ equity (excluding preferred equity). (6) Our 2009 adoption of SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements – an amendment of Accounting Research Bulletin No. 51 (“SFAS No. 160”), requires us to reclassify our presentation of noncontrolling interests (formerly referred to as minority interests). 2
  3. 3. (7) Tangible common equity consists of SVBFG stockholders’ equity (excluding preferred equity and unrealized gains and losses from our fixed income investments) less acquired intangibles and goodwill. Tangible assets represent total assets (excluding unrealized gains and losses from our fixed income investments) less acquired intangibles and goodwill. (8) The operating efficiency ratio is calculated by dividing noninterest expense by total taxable equivalent net interest income plus noninterest income. (9) Ratio represents non-GAAP annualized consolidated net (loss) income attributable to SVBFG (excluding non-tax deductible goodwill impairment charge of $4.1 million recorded in the first quarter of 2009) divided by quarterly average assets. (10) Ratio represents non-GAAP annualized consolidated net (loss) income available to common stockholders (excluding non-tax deductible goodwill impairment charge of $4.1 million recorded in the first quarter of 2009) divided by quarterly average SVBFG stockholders’ equity (excluding preferred equity). (11) The non-GAAP operating efficiency ratio is calculated by dividing noninterest expense (excluding (i) goodwill impairment charges of $4.1 million recorded in the first quarter of 2009 and (ii) the portion of noninterest expense attributable to noncontrolling interests of $3.4 million, $3.0 million and $2.8 million for the quarters ended March 31, 2009, December 31, 2008, and March 31, 2008, respectively) by total taxable equivalent income (excluding taxable equivalent losses attributable to noncontrolling interests of $30.6 million, $8.7 million and $1.5 million for the quarters ended March 31, 2009, December 31, 2008 and March 31, 2008, respectively). Net Interest Income and Margin Net interest income, on a fully taxable equivalent basis, was $92.1 million for the first quarter of 2009, compared to $97.0 million for the fourth quarter of 2008 and $91.3 million for the first quarter of 2008. The following table provides a summary of changes in interest income and interest expense attributable to both volume and rate changes from the fourth quarter of 2008 to the first quarter of 2009. Changes that are not solely due to either volume or rate are allocated in proportion to the percentage changes in average volume and average rate: Q1'09 compared to Q4'08 Increase (decrease) due to change in (Dollars in thousands) Volume Rate Total Interest income: Short-term investment securities $ 2,839 $ (2,522) $ 317 Investment securities 972 (1,031) (59) Loans (2,593) (4,818) (7,411) Increase (decrease) in interest income, net 1,218 (8,371) (7,153) Interest expense: Deposits 1,925 (2,099) (174) Short-term borrowings (368) (400) (768) Long-term debt 43 (1,313) (1,270) Increase (decrease) in interest expense, net 1,600 (3,812) (2,212) $ (382) $ (4,559) $ (4,941) Decrease in net interest income The decrease in net interest income, on a fully taxable equivalent basis, from the fourth quarter of 2008 to the first quarter of 2009, was primarily attributable to the following: • A net decrease in interest income from our loan portfolio of $7.4 million driven principally by decreases in loan yields due to the full quarter effect of a 100 basis point decrease in our prime-lending rate during the fourth quarter of 2008 in response to certain Federal Reserve rate decreases, as well as a decrease in average loan balances of $110.4 million. Our average prime-lending rate was 4.00 percent for the first quarter of 2009, compared to an average of 4.20 percent for the fourth quarter of 2008. Our prime-lending rate at March 31, 2009 and December 31, 2008 was 4.00 percent. • A decrease in interest expense of $1.3 million from our long-term debt, primarily driven by a decrease in interest expense associated with interest rate swap agreements for our 5.70% senior and 6.05% subordinated notes, due to lower London Interbank Offered Rates (“LIBOR”). • A decrease in interest expense of $0.8 million from our short-term borrowings due to a decrease in average balances of $185.5 million. Our net interest margin, on a fully taxable equivalent basis, was 3.97 percent for the first quarter of 2009, compared to 5.39 percent for the fourth quarter of 2008 and 6.27 percent for the first quarter of 2008. The decrease from the fourth quarter of 2008 to the first quarter of 2009 was primarily due to an increase in cash as a result of the growth in interest-bearing deposits, which were primarily invested in overnight funds with the Federal Reserve, as well as decreases in interest income from our loan portfolio due to the full quarter effect of reductions in our prime-lending rate, and decreases in average loan balances. These reductions in our net interest margin 3
  4. 4. were partially offset by a decrease in interest expense from borrowings due to lower LIBOR rates as well as lower average balances outstanding. On an average basis, for the first quarter of 2009, 72.8 percent, or $3.7 billion, of our outstanding gross loans were variable-rate loans that adjust at prescribed measurement dates upon a change in our prime-lending rate or other variable indices. This compares to 74.2 percent, or $4.0 billion, for the fourth quarter of 2008 and 71.7 percent, or $3.1 billion, for the first quarter of 2008. Investment Securities Our investment securities portfolio consists of both a fixed income investment portfolio, which primarily represents interest-earning securities, and a non-marketable securities portfolio, which primarily represents investments managed as part of our funds management business. Total investment securities were $2.0 billion at March 31, 2009, compared to $1.8 billion at December 31, 2008 and $1.6 billion at March 31, 2008. The increase from December 31, 2008 to March 31, 2009 was primarily due to purchases of U.S. agency securities as part of our overall investment strategy. Average interest-earning investment securities were $1.5 billion for the first quarter of 2009, compared to $1.4 billion for the fourth quarter of 2008 and $1.3 billion for the first quarter of 2008. Non-marketable securities were $454.5 million ($178.4 million net of noncontrolling interests) as of March 31, 2009, compared to $467.2 million ($169.1 million net of noncontrolling interests) as of December 31, 2008. The decrease from the fourth quarter of 2008 to the first quarter of 2009 was primarily attributable to unrealized valuation losses of venture capital/private equity investments, partially offset by new investments in the first quarter of 2009. Reconciliations of our non-GAAP non-marketable securities, net of noncontrolling interests, are provided below under the section “Use of Non-GAAP Financial Measures.” Loans Average loans, net of unearned income, were $5.1 billion for the first quarter of 2009, compared to $5.2 billion for the fourth quarter of 2008 and $4.1 billion for the first quarter of 2008. The decrease in average loan balances from the fourth quarter of 2008 to the first quarter of 2009 came primarily from decreases in loans to venture capital/private equity funds for capital calls due to continuing effects of the downturn in the economic environment causing pressures on mergers and acquisitions (“M&A”) activity and lower levels of venture capital investments. Period-end loans, net of unearned income, were $5.0 billion at March 31, 2009, compared to $5.5 billion at December 31, 2008 and $4.3 billion at March 31, 2008. Our nonaccrual loans totaled $97.6 million at March 31, 2009, compared to $84.9 million at December 31, 2008 and $7.6 million at March 31, 2008. The allowance for loan losses related to nonaccrual loans was $40.9 million, $25.9 million and $1.7 million at March 31, 2009, December 31, 2008 and March 31, 2008, respectively. The increase in nonaccrual loans and related allowance for loan losses from the fourth quarter of 2008 to the first quarter of 2009 primarily came from a single loan within our hardware industry portfolio, which required a reserve of $9.2 million. 4
  5. 5. The following table provides a summary of our concentration of loans individually greater than $20 million by industry sector at March 31, 2009, December 31, 2008 and March 31, 2008. Loans individually greater than $20 million at March 31, December 31, March 31, 2009 2008 2008 (Dollars in thousands, except ratios and client data) Technology $ 493,835 $ 567,867 $ 285,143 Private Equity 254,348 352,065 375,351 Life Sciences 28,750 54,201 56,589 Private Client Services 102,491 105,176 64,193 Premium Wineries - 20,310 - All other sectors 48,687 50,500 119,372 Total $ 928,111 $ 1,150,119 $ 900,648 Loans individually greater than $20 million as a percentage of total gross loans 18.40 % 20.72 % 20.57 % Total clients with loans individually greater than $20 million 29 36 25 Loans individually greater than $20 million on nonaccrual status $ 64,085 $ 66,715 $ - Deposits Average deposits were $7.9 billion for the first quarter of 2009, compared to $5.7 billion for the fourth quarter of 2008 and $4.4 billion for the first quarter of 2008. The increase in average deposit balances from the fourth quarter of 2008 to the first quarter of 2009 came primarily from our noninterest-bearing demand deposits, which grew by $1.4 billion to $4.6 billion, and our sweep deposits, which grew by $989.2 million to $1.6 billion. Period-end deposits were $8.5 billion at March 31, 2009, compared to $7.5 billion at December 31, 2008 and $4.8 billion at March 31, 2008. Growth in both average and period-end deposit balances in the first quarter of 2009 was primarily due to the following factors: (i) our decision in late 2008 to utilize our own on-balance sheet sweep product, and to discontinue offering a third-party, off-balance sheet product; and (ii) the desire among some clients to benefit from the security provided by Federal Deposit Insurance Corporation (“FDIC”) insurance in noninterest-bearing accounts. Long-Term Debt Effective January 1, 2009, we adopted the Financial Accounting Standards Board (“FASB”) Staff Position (“FSP”) Accounting Principles Board Opinion No. 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (“FSP APB 14-1”), which required a change in the accounting treatment for our convertible debt instruments. The FSP requires that the proceeds from the issuance of convertible debt instruments be allocated between a liability and an equity component in a manner that reflects the entity’s non-convertible debt borrowing rate when interest expense is recognized in subsequent periods. The resulting debt discount is amortized over the period the convertible debt is expected to be outstanding as additional non-cash interest expense. Historical financial statements for 2007 and 2008 are required to be adjusted retrospectively to conform to the FSP’s new accounting treatment for both our zero-coupon convertible subordinated notes, which matured on June 15, 2008 and our 3.875% convertible senior notes due April 15, 2011. 5
  6. 6. As a result of adopting the requirements of FSP APB 14-1, our net loss applicable to common stockholders for the first quarter of 2009 increased by $0.3 million. Total SVBFG stockholders’ equity, based on cumulative adjustments beginning January 1, 2007, through March 31, 2009, increased by $4.9 million. The following table highlights certain revised items related to the adoption of FSP APB 14-1 in our overall consolidated statements of income and balance sheets for the quarters ended March 31, 2009, December 31, 2008, and March 31, 2008: Three months ended December 31, 2008 March 31, 2008 March 31, 2009 As adjusted As reported in As adjusted As reported in (Dollars in thousands) As reported (1/1/2009) prior filings (1/1/2009) prior filings INCOME STATEMENT Interest expense - borrowings $ 8,181 $ 10,219 $ 9,694 $ 12,536 $ 11,233 Income tax (benefit) expense (1,702) 2,111 2,319 18,283 18,801 Net (loss) income attributable to SVBFG (7,010) 2,105 2,422 27,118 27,903 Net (loss) income available to common stockholders (10,546) 1,398 1,715 27,118 27,903 (Loss) earnings per common share — diluted (0.32) 0.04 0.05 0.78 0.81 FULLY TAXABLE EQUIVALENT Net interest income (fully taxable equivalent basis) $ 92,083 $ 97,024 $ 97,549 $ 91,283 $ 92,586 Net interest margin 3.97 % 5.39 % 5.42 % 6.27 % 6.36 % BALANCE SHEET Total assets $ 10,958,768 $ 10,020,808 $ 10,020,892 $ 6,897,285 $ 6,897,303 Long-term debt 964,175 995,423 1,000,640 892,516 893,189 Additional paid-in capital 71,760 66,201 45,872 13,975 - Retained earnings 701,709 712,254 727,450 664,085 678,078 Noninterest (Loss) Income Noninterest loss was $3.6 million for the first quarter of 2009, compared to noninterest income of $28.9 million for the fourth quarter of 2008 and noninterest income of $41.6 million for the first quarter of 2008. Non-GAAP noninterest income, net of noncontrolling interests, was $27.0 million for the first quarter of 2009, compared to $37.5 million for the fourth quarter of 2008 and $43.3 million for the first quarter of 2008. Reconciliations of our non-GAAP noninterest income and non-GAAP net losses on investment securities, both of which exclude amounts attributable to noncontrolling interests, are provided below under the section “Use of Non- GAAP Financial Measures.” The decrease in noninterest income (GAAP basis) from the fourth quarter of 2008 to the first quarter of 2009 was primarily driven by the following factors: • Net losses on investment securities of $35.0 million for the first quarter of 2009, compared to net losses of $9.8 million for the fourth quarter of 2008 and net losses of $6.1 million for the first quarter of 2008. The increase in net losses of $25.2 million from the fourth quarter of 2008 to the first quarter of 2009 was primarily due to the continuing effects of the downturn in the overall economy on valuations of our venture capital/private equity investments. The following table provides a summary of net losses on investment securities for the three months ended March 31, 2009 and December 31, 2008: Three months ended December 31, 2008 March 31, 2009 Managed Co- Managed Investment Funds Of Sponsored Debt Funds Funds Funds Total (Dollars in thousands) Other Total Unrealized (losses) gains $ (4,697) $ (31,079) $ 984 $ - $ (34,792) $ (7,207) Realized (losses) gains (523) 883 240 (853) (253) (2,621) $ (5,220) $ (30,196) $ 1,224 $ (853) $ (35,045) $ (9,828) Total (losses) gains on investment securities, net Less: (losses) income attributable to noncontrolling interests, including carried interest (4,777) (26,105) 444 - (30,438) (8,702) Non-GAAP net (losses) gains on investment securities, net of noncontrolling interests $ (443) $ (4,091) $ 780 $ (853) $ (4,607) $ (1,126) As of March 31, 2009, we held investments, either directly or through seven of our managed investment funds, in 440 venture capital/private equity funds, 73 companies and four sponsored debt funds. • A decrease in client investment fee income of $3.2 million, primarily from our decision in the latter part of 6
  7. 7. the fourth quarter of 2008 to discontinue offering a third party off-balance sheet sweep product which reduced average client fund balances by $2.0 billion, and a result of lower margins earned on certain products owing to historically low rates in the short-term fixed income markets. • A decrease in net gains on derivative instruments of $3.2 million. The following table provides a summary of our net gains on derivative instruments: Three months ended March 31, December 31, March 31, 2009 2008 2008 (Dollars in thousands) Gains (losses) on foreign exchange forward contracts, net: Gains on client foreign exchange forward contracts, net $ 496 $ 2,466 $ 728 Gains (losses) on internal foreign exchange forward contracts, net (1) 1,943 3,200 (3,091) Total gains (losses) on foreign exchange forward contracts, net 2,439 5,666 (2,363) Change in fair value of interest rate swap (170) (2,232) (493) Net (losses) gains on equity warrant assets (455) 1,592 5,455 $ 1,814 $ 5,026 $ 2,599 Total gains on derivative instruments, net (1) Represents the change in fair value of foreign exchange forward contracts used to economically reduce our foreign exchange exposure related to certain foreign currency denominated loans. Revaluations of foreign currency denominated loans are recorded on the line item “Other” as part of noninterest (loss) income, a component of consolidated net (loss) income. The decrease in net gains on derivative instruments from the fourth quarter of 2008 to the first quarter of 2009 was primarily driven by the following factors: Lower gains of $2.0 million on client foreign exchange forward contracts primarily due to lower o volatility in the currency markets. In addition, we recognized $1.9 million from internal foreign exchange forward contracts hedging our foreign currency denominated loans, which partially offset net losses of $2.7 million from revaluation of our foreign currency denominated loans that are included in other noninterest income. Net losses on equity warrant assets of $0.5 million in the first quarter of 2009, compared to net o gains of $1.6 million in the fourth quarter of 2008, primarily due to higher warrant terminations and lower valuations of certain investments in our warrant portfolio. Lower net losses of $2.1 million from changes in the fair value of the interest rate swap o associated with our junior subordinated debentures. In December 2008, our counterparty called this swap for settlement in January 2009. As a result, the swap is no longer designated as a hedging instrument. • A decrease in foreign exchange fees of $1.2 million, primarily due to a decrease in client trading activity. Noninterest Expense Noninterest expense was $87.1 million for the first quarter of 2009, compared to $61.8 million for the fourth quarter of 2008 and $83.4 million for the first quarter of 2008. Non-GAAP noninterest expense, net of noncontrolling interests, was $79.7 million for the first quarter of 2009, compared to $58.8 million for the fourth quarter of 2008 and $80.7 million for the first quarter of 2008. Reconciliations of our non-GAAP noninterest expense, net of noncontrolling interests, are provided below under the section “Use of Non-GAAP Financial Measures.” 7
  8. 8. The following table provides a summary of certain noninterest expense (GAAP basis) items: Three months ended March 31, December 31, March 31, 2009 2008 2008 (Dollars in thousands) Compensation and benefits: Salaries and wages $ 29,291 $ 27,196 $ 25,927 Incentive Compensation Plan 5,039 (8,782) 11,253 Employee Stock Ownership Plan - (4,370) 1,771 Other employee benefits 13,950 9,833 14,830 Total compensation and benefits 48,280 23,877 53,781 Impairment of goodwill 4,092 - - FDIC assessments 2,675 1,644 436 (Reduction of) provision for unfunded credit commitments (2,284) 1,607 (165) Other (1) 34,377 34,702 29,385 Total noninterest expense $ 87,140 $ 61,830 $ 83,437 (1) Other noninterest expense includes professional services, premises and equipment, net occupancy, business development and travel, correspondent bank fees, telephone, data processing services, and other noninterest expenses. For further details of noninterest expense items, please refer to “Interim Consolidated Statements of Income”. The increase in noninterest expense (GAAP basis) from the fourth quarter of 2008 to the first quarter of 2009 was primarily attributable to the following: • An increase of $24.4 million in compensation and benefits expense, primarily as a result of the following: An increase of $18.2 million in incentive compensation related expenses due to lower incentive o compensation related expenses in the fourth quarter of 2008, as a result of 2008 annual financial results being below our expectations. An increase of $2.1 million in salaries and wages primarily resulting from an increase in the o number of average full-time equivalent (“FTE”) employees. The average number of FTEs increased by 18 to 1,258 FTEs for the first quarter of 2009, compared to an average of 1,240 FTEs for the fourth quarter of 2008. • A non-tax deductible goodwill impairment charge of $4.1 million resulting from changes in our outlook for eProsper’s future financial performance due in part to the current economic environment. • An increase of $1.0 million in FDIC assessments primarily attributable to a $2.3 billion increase in average deposit balances in the first quarter of 2009, as well as an increase in FDIC fee rates. • A reduction of provision for unfunded credit commitments of $2.3 million for the first quarter of 2009, compared to a provision of $1.6 million for the fourth quarter of 2008. The reduction of provision for unfunded credit commitments of $2.3 million for the first quarter of 2009 was primarily reflective of a decrease in the balance of our total unfunded credit commitments. Total unfunded credit commitments were $5.0 billion at March 31, 2009, compared to $5.6 billion at December 31, 2008. Income Tax (Benefit) Expense Effective January 1, 2009, we adopted SFAS No. 160, which requires us to clearly identify and distinguish between the interests of the Company and the interest of the noncontrolling owners by presenting noncontrolling interests after net (loss) income in our interim consolidated statements of income. As a result, our effective tax rate is calculated by dividing income tax (benefit) expense by the sum of (loss) income before income tax (benefit) expense and the net (loss) income attributable to noncontrolling interests. Our effective tax rate was 19.5 percent for the first quarter of 2009, compared to 50.1 percent for the fourth quarter of 2008 and 40.3 percent for the first quarter of 2008. The decrease in the tax rate from the fourth quarter of 2008 to the first quarter of 2009 was primarily attributable to a 37.8 percent rate decrease due to the higher tax 8
  9. 9. impact of tax advantaged investments on our overall pre-tax loss. This decrease was partially offset by a 16.4 percent increase in our tax rate due to the tax impact of the $4.1 million non-tax deductible goodwill impairment associated with eProsper. Credit Quality The following table provides a summary of our allowance for loan losses: Three months ended March 31, December 31, March 31, (Dollars in thousands) 2009 2008 2008 Allowance for loan losses, beginning balance $ 107,396 $ 60,290 $ 47,293 Provision for loan losses 43,466 70,957 7,723 Gross loan charge-offs (42,013) (25,509) (6,208) Loan recoveries 1,161 1,658 828 Allowance for loan losses, ending balance $ 110,010 $ 107,396 $ 49,636 Provision as a percentage of total gross loans (annualized) 3.49 % 5.08 % 0.71 % Gross loan charge-offs as a percentage of average total gross loans (annualized) 3.30 1.93 0.60 Net loan charge-offs as a percentage of average total gross loans (annualized) 3.21 1.80 0.52 Allowance for loan losses as a percentage of total gross loans 2.18 1.93 1.13 Total gross loans at period-end $ 5,045,208 $ 5,551,636 $ 4,377,498 Average total gross loans 5,159,412 5,266,380 4,141,414 Our provision for loan losses of $43.5 million for the first quarter of 2009 was primarily attributable to the following: • Gross loan charge-offs of $23.1 million and reserves of $9.2 million related to two loans within our hardware industry portfolio. • Gross loan charge-offs of $18.9 million, primarily from our early-stage client portfolio. • A reduction of $7.0 million in general reserves due to the decline in period-end loan balances. • A reversal of $4.9 million in specific reserves due to the repayment by affiliates of HRJ Capital, LLC (“HRJ”) of certain outstanding balances on capital call lines of credit during the first quarter of 2009. • Loan recoveries of $1.2 million, primarily from our early-stage and corporate technology client portfolios. • Our net loan charge-offs as a percentage of average total gross loans (annualized) was 3.21 percent for the first quarter of 2009, compared to our allowance for loan losses as a percentage of total gross loans of 2.18 percent for the first quarter of 2009. We expect net charge-offs for the full year 2009 to be lower than the annualized trend indicated by the first quarter 2009 results. An independent asset management firm recently announced that it had entered into a term sheet with HRJ to assume the management of HRJ’s funds of funds. The final transaction is subject to the execution of definitive agreements between the parties and other closing conditions. If the transaction closes based on the proposed terms, we do not expect it to have a material impact on our net income and provision for loan losses. Noncontrolling Interests Net loss attributable to noncontrolling interests (formerly referred to as minority interests) was $34.0 million for the first quarter of 2009, compared to a net loss of $11.7 million for the fourth quarter of 2008 and a net loss of $4.2 million for the first quarter of 2008. Net loss attributable to noncontrolling interests of $34.0 million for the first quarter of 2009 was primarily attributable to the following: • Losses on investment securities (including carried interest) attributable to noncontrolling interests of $30.4 million, stemming mainly from losses of $26.1 million from our managed funds of funds and $4.8 million from our managed co-investment funds. • Noninterest expense of $3.4 million, principally related to management fees paid by the noncontrolling interests to the general partner entities managed by SVB Capital. Capital Included in the net loss applicable to common stockholders for the first quarter of 2009 is $3.5 million related to dividends and discount amortization in connection with our preferred stock issued under the Capital Purchase Program (“CPP”) on December 12, 2008. This compares to $0.7 million for the fourth quarter of 2008, which was reflective of the preferred stock being outstanding for only part of the fourth quarter of 2008. 9
  10. 10. Outlook for the Year Ending December 31, 2009 Our outlook for the year ending December 31, 2009 is provided below on a GAAP basis, unless otherwise noted. We have provided our current outlook for the expected full year results of our significant forecasted activities. In general, we do not provide our outlook for selected items where the timing or financial impact are particularly uncertain, or for certain potential unusual or one-time items; however in light of the current uncertain economic environment, we have provided directional guidance on two such elements, specifically net gains (losses) from equity warrant assets and net gains (losses) from investments in venture capital/private equity related activities. The outlook observations presented below are, by their nature, forward-looking statements and are subject to substantial risks and uncertainties which are discussed below under the caption “Forward-Looking Statements”. For the year ending December 31, 2009, compared to our 2008 results, we currently expect the following outlook: Current outlook compared to 2008 results as Change in outlook compared to outlook reported as of of April 23, 2009 January 22, 2009 Increase at a percentage rate in the high single Outlook decreased from mid-teens, due to overall market Average loan balances digits conditions Increase at a percentage rate in the sixties; Outlook increased from high thirties, due to higher-than-expected Average deposit balances majority of growth from interest-bearing retention of new deposits on balance sheet in the fourth quarter of deposits 2008 and the first quarter of 2009 Outlook decreased from 4.7% - 5.0% range, due to higher-than- Net interest margin Betrween 3.7% to 4.0% expected levels of cash invested in a lower rate environment Approximately 1.9% of total gross loans. Outlook increased from 1.4%, due to increased levels of total Allowance for loan losses as a Range is exclusive of existing specific reserves charge-offs in the first quarter of 2009 as well as higher levels of percentage of gross loans for impaired loans specific reserves for loans impaired in the first quarter of 2009 Outlook increased from 1.3% due to increased levels of total Between 1.75% to 1.80% of total gross loans. charge-offs in the first quarter of 2009 Range is inclusive of approximately $40.9 million in net charge-offs in the first quarter of 2009 but exclusive of any potential net charge offs related to loans impaired as of March 31, Net loan charge-offs 2009. For the second through fourth quarter of 2009, we expect quarterly net charge-offs (annualized) of approximately 1.4% of total gross loans, excluding any potential net charge- offs related to loans impaired as of March 31, 2009 Ratio of non-performing loans and Increase during 2009 due to current and No change from previous outlook assets expected economic conditions Fees for deposit services, letters Increase at a percentage rate in the low single Outlook decreased from mid single digits, due to overall market of credit and foreign exchange, in digits conditions aggregate Decline significantly to approximately one-half Client investment fees No change from previous outlook of 2008 levels Net gains (losses) from equity Outlook worsened from a modest decline, due to overall market No net gains expected warrant assets conditions Outlook worsened from modest increase in losses, due to the Net losses on investment continuing effects of the downturn in the overall economy, causing securities, net of noncontrolling Increase to approximately double of 2008 levels pressures on valuations of venture capital/private equity interests* investments Noninterest expense* (excluding Outlook decreased from high twenties, due to lower compensation expenses related to goodwill Increase at a percentage rate in the high teens and benefits, partially offset by continued investment in our core impairment and noncontrolling business and significantly higher FDIC assessment fees interests) * non-GAAP Forward-Looking Statements This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts, such as forecasts of our future financial results and condition, expectations for our operations and business, and our underlying assumptions of such forecasts and expectations. In this release, including in the section “Outlook for the Year Ending December 31, 2009” above and in our discussion of the term sheet entered into between HRJ and an independent asset management firm, we make forward-looking statements discussing management’s expectations about economic conditions, opportunities in the market, our financial and credit performance and 10
  11. 11. financial results (and the components of such results) and expectations about the impact of transactions for the year 2009. Although management believes that the expectations reflected in our forward-looking statements are reasonable and has based these expectations on our beliefs and assumptions, such expectations are not guarantees and may prove to be incorrect. Actual results could differ significantly. Factors that may cause the outlook for the year 2009 and other forward-looking statements herein to change include, among others, the following: (i) accounting changes, as required by U.S. generally accepted accounting principles, (ii) continued deterioration or other changes in the state of the economy or the markets in which we conduct business or are served by us, (iii) changes in credit quality of our loan portfolio, (iv) changes in interest rates or market levels or factors affecting them, (v) changes in the performance or equity valuations of funds or companies in which we have invested or hold derivative instruments or equity warrant assets, (vi) variations from our expectations as to factors impacting our cost structure, (vii) errors in our assessment of the creditworthiness or liquidity of our clients or unanticipated effects of credit concentration risks which create or exacerbate deterioration of such creditworthiness or liquidity and (viii) challenges in obtaining approvals or satisfying other conditions to completing the proposed transaction between HRJ and an independent asset management firm on the terms proposed. For additional information about these factors, please refer to our public reports filed with the U.S. Securities and Exchange Commission, including our most recently-filed quarterly or annual report. The forward-looking statements included in this release are made only as of the date of this release. We do not intend, and undertake no obligation, to update these forward-looking statements. Earnings Conference Call On April 23, 2009, we will host a conference call at 3:00 p.m. (Pacific Time) to discuss the financial results for the first quarter ended March 31, 2009. The conference call can be accessed by dialing (877) 663-9523 or (404) 665- 9482, and referencing the conference ID “95053970”. A live webcast of the audio portion of the call can be accessed on the Investor Relations section of our website at www.svb.com. A replay of the conference call will be available beginning at approximately 6:00 p.m. (Pacific Time) on Thursday, April 23, 2009, through midnight on Thursday, May 7, 2009, by dialing (800) 642-1687 or (706) 645-9291 and referencing conference ID number “95053970.” A replay of the audio webcast will also be available on www.svb.com for 12 months beginning Thursday, April 23, 2009. About SVB Financial Group For over 25 years, SVB Financial Group and its subsidiaries, including Silicon Valley Bank, have been dedicated to helping entrepreneurs succeed. SVB Financial Group is a financial holding company that serves companies in the technology, life science, venture capital/private equity and premium wine industries. Offering diversified financial services through Silicon Valley Bank, SVB Analytics, SVB Capital, SVB Global and SVB Private Client Services, SVB Financial Group provides clients with commercial, investment, international and private banking services. The Company also offers funds management, broker-dealer services and asset management, as well as the added value of its knowledge and networks worldwide. Headquartered in Santa Clara, California, SVB Financial Group operates through 27 offices in the U.S. and international operations in China, India, Israel and the United Kingdom. More information on the Company can be found at www.svb.com. (SIVB-F) Banking services are provided by Silicon Valley Bank, the California bank subsidiary and commercial banking operation of SVB Financial Group, and a member of the FDIC and the Federal Reserve. SVB Private Client Services is a division of Silicon Valley Bank. SVB Financial Group is also a member of the Federal Reserve. 11
  12. 12. SVB FINANCIAL GROUP AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three months ended March 31, December 31, March 31, 2009 2008 2008 (Dollars in thousands, except share data) Interest income: Loans $ 88,251 $ 95,662 $ 89,759 Investment securities: Taxable 14,851 14,789 13,770 Non-taxable 1,061 1,140 937 Federal funds sold, securities purchased under agreements to resell and other short-term investment securities 2,376 2,059 4,117 Total interest income 106,539 113,650 108,583 Interest expense: Deposits 6,847 7,021 5,269 Borrowings (1) 8,181 10,219 12,536 Total interest expense 15,028 17,240 17,805 Net interest income 91,511 96,410 90,778 Provision for loan losses 43,466 70,957 7,723 Net interest income after provision for loan losses 48,045 25,453 83,055 Noninterest (loss) income: Foreign exchange fees 7,466 8,660 7,844 Deposit service charges 6,823 6,034 5,891 Client investment fees 6,248 9,492 13,722 Letters of credit and standby letters of credit income 2,892 2,868 2,946 Gains on derivative instruments, net 1,814 5,026 2,599 Corporate finance fees - - 3,640 Losses on investment securities, net (35,045) (9,828) (6,112) Other 6,192 6,647 11,035 Total noninterest (loss) income (3,610) 28,899 41,565 Noninterest expense: Compensation and benefits 48,280 23,877 53,781 Professional services 12,080 11,924 8,801 Premises and equipment 5,407 5,759 5,188 Net occupancy 4,305 4,482 4,348 Impairment of goodwill 4,092 - - Business development and travel 3,273 4,831 3,422 FDIC assessments 2,675 1,644 436 Correspondent bank fees 1,913 1,617 1,506 Telephone 1,380 1,406 1,152 Data processing services 1,012 960 1,077 (Reduction of) provision for unfunded credit commitments (2,284) 1,607 (165) Other 5,007 3,723 3,891 Total noninterest expense 87,140 61,830 83,437 (Loss) income before income tax (benefit) expense (42,705) (7,478) 41,183 Income tax (benefit) expense (1) (1,702) 2,111 18,283 Net (loss) income (41,003) (9,589) 22,900 Net loss attributable to noncontrolling interests (2) 33,993 11,694 4,218 Net (loss) income attributable to SVBFG (1)(2) $ (7,010) $ 2,105 $ 27,118 Preferred stock dividend and discount accretion (3,536) (707) - Net (loss) income available to common stockholders (1) $ (10,546) $ 1,398 $ 27,118 (Loss) earnings per common share — basic (1) $ (0.32) $ 0.04 $ 0.84 (Loss) earnings per common share — diluted (1) $ (0.32) $ 0.04 $ 0.78 Weighted average common shares outstanding — basic 32,931,714 32,809,705 32,279,892 Weighted average common shares outstanding — diluted 32,931,714 33,450,626 34,582,568 (1) Balances for all periods presented reflect our adoption of FSP APB 14-1. Refer to “Long-Term Debt” discussion for more details Amounts for the quarters ended December 31, 2008 and March 31, 2008 have been retrospectively adjusted. (2) Our 2009 adoption of SFAS No. 160 requires us to reclassify our income statement presentation for noncontrolling interests. 12
  13. 13. SVB FINANCIAL GROUP AND SUBSIDIARIES INTERIM CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, March 31, 2009 2008 2008 (Dollars in thousands, except par value, share data and ratios) Assets: Cash and due from banks $ 3,362,216 $ 1,791,396 $ 303,973 Federal funds sold, securities purchased under agreements to resell and other short-term investment securities 286,787 647,414 372,159 Investment securities 2,032,157 1,786,100 1,618,542 Loans, net of unearned income 5,003,069 5,506,253 4,349,238 Allowance for loan losses (110,010) (107,396) (49,636) Net loans 4,893,059 5,398,857 4,299,602 Premises and equipment, net of accumulated depreciation and amortization 29,341 30,589 36,725 Goodwill - 4,092 4,092 Accrued interest receivable and other assets 355,208 362,360 262,192 Total assets (1) $ 10,958,768 $ 10,020,808 $ 6,897,285 Liabilities, SVBFG stockholders' equity and total equity: Liabilities: Deposits: Noninterest-bearing demand $ 5,228,830 $ 4,419,965 $ 3,034,885 Negotiable order of withdrawal (NOW) 43,802 58,133 71,440 Money market 1,061,547 1,213,086 1,009,226 Foreign money market 45,439 53,123 - Time 393,433 379,200 386,213 Sweep 1,709,273 1,349,965 267,449 Total deposits 8,482,324 7,473,472 4,769,213 Short-term borrowings 56,450 62,120 120,000 Other liabilities 163,422 175,553 167,016 Long-term debt (1) 964,175 995,423 892,516 Total liabilities 9,666,371 8,706,568 5,948,745 Discount on zero-coupon convertible subordinated notes (1) - - 673 SVBFG stockholders’ equity: Preferred stock, $0.001 par value, 20,000,000 shares authorized; no shares issued and outstanding - - - Preferred stock, Series B Fixed Rate Cumulative Perpetual Preferred Stock, $1,000 liquidation value per share, 235,000 shares authorized; 235,000 shares issued and outstanding, net of discount 221,783 221,185 - Common stock, $0.001 par value, 150,000,000 shares authorized; 32,935,515 shares, 32,917,007 shares and 31,879,622 shares outstanding, respectively 33 33 32 Additional paid-in capital (1) 71,760 66,201 13,975 Retained earnings (1) 701,709 712,254 664,085 Accumulated other comprehensive loss (3,162) (5,789) (2,954) Total SVBFG stockholders’ equity (2) 992,123 993,884 675,138 Noncontrolling interests (2) 300,274 320,356 272,729 Total equity (2) 1,292,397 1,314,240 947,867 Total liabilities and total equity $ 10,958,768 $ 10,020,808 $ 6,897,285 Capital Ratios: Total risk-based capital ratio 18.87 % 17.58 % 15.54 % Tier 1 risk-based capital ratio 13.78 12.51 10.61 Tier 1 leverage ratio 10.19 13.00 11.06 Tangible common equity to tangible assets ratio (3) 6.94 7.57 9.76 Tangible common equity to risk-weighted assets ratio 10.11 9.23 9.94 Other Period-End Statistics: Loans, net of unearned income-to-deposits ratio 58.98 % 73.68 % 91.19 % Book value per common share (4) $ 23.10 $ 23.07 $ 21.18 Full-time equivalent employees 1,262 1,244 1,190 (1) Balances for all periods presented reflect our adoption of FSP APB 14-1. Refer to “Long-Term Debt” discussion for more details. Balances as of December 31, 2008 and March 31, 2008 have been retrospectively adjusted. (2) Our 2009 adoption of SFAS No. 160 requires us to reclassify our balance sheet presentation for noncontrolling interests. (3) Tangible common equity consists of SVB Financial Group (“SVBFG”) stockholders’ equity (excluding preferred equity and unrealized gains and losses from our fixed income investments) less acquired intangibles and goodwill. Tangible assets represent total assets (excluding unrealized gains and losses from our fixed income investments) less acquired intangibles and goodwill. (4) Book value per common share is calculated by dividing total SVBFG stockholders’ equity (excluding preferred equity) by total outstanding common shares. 13
  14. 14. SVB FINANCIAL GROUP AND SUBSIDIARIES INTERIM AVERAGE BALANCES, RATES AND YIELDS (Unaudited) Three months ended March 31, 2009 December 31, 2008 March 31, 2008 Interest Interest Interest Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Balance Expense Rate (Dollars in thousands) Interest-earning assets: Federal funds sold, securities purchased under agreements to resell and other short-term investment securities (1) 0.34 % $ 1.43 % $ 3.49 % $ 2,825,988 $ 2,376 574,295 $ 2,059 475,112 $ 4,117 Investment securities: (2) Taxable 4.44 4.73 4.72 1,357,752 14,851 1,244,804 14,789 1,173,698 13,770 Non-taxable (3) 6.22 6.19 6.49 106,404 1,633 112,729 1,754 89,360 1,442 Total loans, net of unearned income (4) 7.00 7.28 8.78 5,116,252 88,251 5,226,667 95,662 4,112,865 89,759 Total interest-earning assets 4.62 6.35 7.50 9,406,396 107,111 7,158,495 114,264 5,851,035 109,088 Cash and due from banks 321,282 354,465 276,471 Allowance for loan losses (111,527) (62,781) (48,276) Goodwill 4,048 4,092 4,092 Other assets (5) 836,208 756,365 668,667 Total assets (6) $ 10,456,407 $ 8,210,636 $ 6,751,989 Funding sources: Interest-bearing liabilities: NOW deposits 0.38 % $ 0.53 % $ 0.40 % $ 52,282 $ 49 53,638 $ 72 37,148 $ 37 Regular money market deposits 0.69 1.31 1.25 179,099 305 181,696 600 136,485 425 Bonus money market deposits 0.71 1.08 1.49 986,034 1,738 1,074,162 2,906 873,954 3,234 Foreign money market deposits 1.09 1.39 - 64,485 174 46,027 161 - - Time deposits 0.79 1.12 0.90 376,833 730 447,719 1,255 343,571 766 Sweep deposits 0.96 1.25 2.25 1,632,420 3,851 643,226 2,027 144,256 807 Total interest-bearing deposits 0.84 1.14 1.38 3,291,153 6,847 2,446,468 7,021 1,535,414 5,269 Short-term borrowings 0.18 1.35 3.10 47,044 21 232,519 789 234,945 1,811 Zero-coupon convertible subordinated notes (6) - - 4.19 - - - - 147,971 1,542 3.875% convertible senior notes (6) 5.81 5.69 - 244,789 3,505 244,513 3,499 - - Junior subordinated debentures 5.70 5.69 5.50 55,921 786 53,807 769 52,969 725 Senior and subordinated notes 2.43 3.16 5.18 568,206 3,407 540,333 4,296 532,376 6,854 Other long-term debt 1.85 2.66 4.23 101,269 462 129,358 866 152,636 1,604 Total interest-bearing liabilities 1.41 1.88 2.70 4,308,382 15,028 3,646,998 17,240 2,656,311 17,805 Portion of noninterest-bearing funding sources 5,098,014 3,511,497 3,194,724 Total funding sources 0.65 0.96 1.23 9,406,396 15,028 7,158,495 17,240 5,851,035 17,805 Noninterest-bearing funding sources: Demand deposits 4,636,553 3,227,033 2,899,599 Other liabilities 184,844 202,647 245,506 Discount on zero-coupon convertible subordinated notes (6) - - 1,343 SVBFG stockholders’ equity (6) 1,008,102 803,935 687,566 Noncontrolling interests (7) 318,526 330,023 261,664 Portion used to fund interest-earning assets (5,098,014) (3,511,497) (3,194,724) $ 10,456,407 $ 8,210,636 $ 6,751,989 Total liabilities and equity Net interest income and margin (6) 3.97 % 5.39 % 6.27 % $ 92,083 $ 97,024 $ 91,283 Total deposits $ 7,927,706 $ 5,673,501 $ 4,435,013 Average SVBFG stockholders’ equity as a percentage of average assets 9.64 % 9.79 % 10.18 % Reconciliation to reported net interest income: Adjustments for taxable equivalent basis (572) (614) (505) $ 91,511 $ 96,410 $ 90,778 Net interest income, as reported (1) Includes average interest-bearing deposits in other financial institutions of $180.0 million, $124.2 million and $82.9 million for the quarters ended March 31, 2009, December 31, 2008, and March 31, 2008, respectively. (2) Yields on interest-earning investment securities do not give effect to changes in fair value that are reflected in other comprehensive income. (3) Interest income on non-taxable investment securities is presented on a fully taxable equivalent basis using the federal statutory tax rate of 35.0 percent for all periods presented. (4) Nonaccrual loans are reflected in the average balances of loans, and related income, if recognized, is included in interest income. (5) Average investment securities of $467.0 million, $415.8 million and $345.2 million for the quarters ended March 31, 2009, December 31, 2008, and March 31, 2008, respectively, were classified as other assets as they were noninterest-earning assets. These investments primarily consisted of non-marketable securities. (6) Balances for all periods presented reflect our adoption of FSP APB 14-1. Refer to “Long-Term Debt” discussion for more details. Amounts for the quarters ended December 31, 2008 and March 31, 2008 have been retrospectively adjusted. (7) Our 2009 adoption of SFAS No. 160, requires us to reclassify our presentation of noncontrolling interests. 14
  15. 15. Gains on Derivative Instruments, Net Three months ended % Change March 31, December 31, March 31, December 31, March 31, 2009 2008 2008 2008 2008 (Dollars in thousands) Gains (losses) on foreign exchange forward contracts, net: Gains on client foreign exchange forward contracts, net (1) (79.9) % $ 496 $ 2,466 $ 728 (31.9) % Gains (losses) on internal foreign exchange forward contracts, net (2) (39.3) (162.9) 1,943 3,200 (3,091) Total gains (losses) on foreign exchange forward contracts, net (57.0) NM 2,439 5,666 (2,363) Change in fair value of interest rate swap (3) (65.5) (170) (2,232) (493) (92.4) Equity warrant assets: Gains on exercise, net (75.8) (95.3) 210 867 4,516 Change in fair value (4): Cancellations and expirations (1,198) (679) (457) 76.4 162.1 Other changes in fair value (62.0) (61.8) 533 1,404 1,396 Total net (losses) gains on equity warrant assets (5) (128.6) (108.3) (455) 1,592 5,455 Total gains on derivative instruments, net $ 1,814 $ 5,026 $ 2,599 (63.9) % (30.2) % NM- Not meaningful (1) Represents the net gains for foreign exchange forward contracts executed on behalf of clients. (2) Represents the change in the fair value of foreign exchange forward contracts used to economically reduce our foreign exchange exposure risk related to certain foreign currency denominated loans. Revaluations of foreign currency denominated loans are recorded on the line item “Other” as part of noninterest income, a component of consolidated net income. (3) Represents the change in the fair value hedge of the junior subordinated debentures. In December 2008, our counterparty called this swap for settlement in January 2009. As a result, the swap is no longer designated as a hedging instrument. (4) At March 31, 2009, we held warrants in 1,303 companies, compared to 1,307 companies at December 31, 2008 and 1,188 companies at March 31, 2008. (5) Includes net gains on equity warrant assets held by consolidated investment affiliates. Relevant amounts attributable to noncontrolling interests are reflected in the interim consolidated statements of income under the caption “Net Loss Attributable to Noncontrolling Interests”. Net Loss Attributable to Noncontrolling Interests (1) Three months ended March 31, December 31, March 31, (Dollars in thousands) 2009 2008 2008 Net interest loss (income) (2) $ 14 $ 22 $ (257) Noninterest loss (2) 31,907 8,577 975 Noninterest expense (2) 3,387 3,035 2,759 Carried interest (3) (1,315) 60 741 $ 33,993 $ 11,694 $ 4,218 Net loss attributable to noncontrolling interests (1) Our 2009 adoption of SFAS No. 160 requires us to reclassify our presentation of noncontrolling interests. (2) Represents noncontrolling interests share in net interest income, noninterest (loss) income, and noninterest expense. (3) Represents the change in the preferred allocation of income we earn as general partners managing two of our managed funds of funds and the preferred allocation earned by the general partner entity managing one of our consolidated sponsored debt funds. 15

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